Friday, January 14, 2011

The 180th day is almost here. On January 26, 2011, Chapter 303 of the Laws of 2010 takes effect. As of that date, New York no-fault insurers will not longer be allowed to exclude "first party benefits" required by New York Insurance Law § 5103(a) to a person who is injured as a result of operating a motor vehicle while in an intoxicated condition or while the person’s ability to operate the vehicle is impaired by the use of a drug within the meaning of Vehicle and Traffic Law § 1192, and who receives necessary emergency health services rendered in a general hospital, including ambulance services attendant thereto and related medical screening.

The new law amends Insurance Law § 5103(b)(2) as follows (new language underlined):

(b) An insurer may exclude from coverage required by subsection (a) hereof a person who:

(2) Is injured as a result of operating a motor vehicle while in an intoxicated condition or while his ability to operate such vehicle is impaired by the use of a drug within the meaning of section eleven hundred ninety-two of the vehicle and traffic law; provided, however, that an insurer shall not exclude such person from coverage with respect to necessary emergency health services rendered in a general hospital, as defined in subdivision ten of section two thousand eight hundred one of the public health law, including ambulance services attendant thereto and related medical screening. notwithstanding any other law, where the covered person is found to have violated section eleven hundred ninety two of the vehicle and traffic law, the insurer has a cause of action for the amount of first party benefits paid or payable on behalf of such covered person against such covered person.

New York auto policies issued, renewed, modified, altered or amended on or after January 26, 2011 must contain this new exception to the mandatory PIP endorsement's optional intoxication exclusion. Whether this exception must also apply to OBEL and APIP, however, is presently unclear at least in my opinion.

Chapter 303 amended Insurance Law § 5103(b)(2) to prohibit a no-fault insurer from excluding from coverage necessary emergency health services rendered in a general hospital (as defined in Public Health Law § 2801(10)[2]), including ambulance services attendant thereto and related medical screening, for any person who is injured as a result of operating a motor vehicle while in an intoxicated condition or while the person’s ability to operate the vehicle is impaired by the use of a drug within the meaning of Vehicle and Traffic Law § 1192. The amendment permits a no-fault insurer to maintain a cause of action against the covered person for the amount of first party benefits paid or payable on behalf of the covered person if such person is found to have violated Vehicle and Traffic Law § 1192.

For the purposes of compliance with Chapter 303, the Department interprets “necessary emergency health services” to mean services rendered to a person by or under the supervision of a physician, paramedic, or emergency medical technician to treat the onset of sudden pain or injury and to stabilize the person, provided the person is transported directly from the scene of the motor vehicle accident to the general hospital. Pursuant to this interpretation, once the sudden pain or injury is treated and the person is stabilized, (generally in the emergency room) the no-fault insurance coverage ceases. In order to facilitate timely payment, a hospital should specify what portion of the bill consists of “necessary emergency health services.” If the hospital does not specify what portion consists of “necessary emergency health services,” then a no-fault insurer may request this information.

Further, the bill’s sponsor’s memorandum in support notes that because health service providers “are sometimes not compensated for services they are required to render to stabilize their patients in emergency situations,” health service providers “avoid blood alcohol and other tests for intoxication or drug use for fear they will lead to denial of compensation.” As a result, the Department interprets “related medical screening” to include tests for intoxication or drug use as a necessary emergency health service.

Chapter 303 further amends Insurance Law § 5103(b)(2) to permit a no-fault insurer to maintain a cause of action against the covered person for the amount of first-party benefits paid or payable on behalf of the person where the covered person is found to have violated Vehicle and Traffic Law § 1192. While Chapter 303 does not specify who is responsible for determining that the covered person violated this section or what constitutes a violation, the bill’s memorandum in support states in the summary of specific provisions that the bill “also permits insurers to recover payments that they have made for these services from the individual in the event he or she is found guilty of a DWI or DUI offense.” Based on this language, the Department believes that it was the Legislature’s intent that, before a no-fault insurer has a cause of action against a covered person, a court of competent jurisdiction first must find the covered person guilty of driving while intoxicated or driving while under the influence. In addition, the finding of guilt must be a final decision. A decision is not final until any subsequent appeals are resolved.

As stated previously, 11 NYCRR § 65-3.14(b)(1) states that a no-fault insurer only may exclude a person from coverage if the intoxicated or drugged condition was a contributing cause of the accident causing the injuries. The Department does not construe the amendment in Chapter 303 to provide a no-fault insurer with a cause of action against a covered person who violates Vehicle and Traffic Law § 1192 without regard to whether the intoxicated or drugged condition was a contributing cause of the accident, such as where an insured’s vehicle is hit while properly stopped at a stop sign or red light. Therefore, a no-fault insurer may not recover the benefits paid or payable on behalf of a covered person if the intoxicated or impaired condition was not a contributing cause of the injuries.

Section 52.16(c)(8) of 11 NYCRR 52 (Regulation 62) provides, in part, that a health insurance policy may limit or exclude benefits to the extent provided for any loss or portion thereof for which mandatory automobile no-fault benefits are recovered or recoverable. If a no-fault insurer brings an action against a covered person and receives a judgment to recover no-fault benefits paid on behalf of the person, then the person’s health insurer may be responsible for the person’s necessary emergency health services rendered in a general hospital, because no-fault insurance benefits would no longer be “recovered or recoverable.” A no-fault insurer may, with the written consent of the insured, seek recovery directly from the insured’s health insurer.[3] Moreover, Insurance Law § 3216(d)(2)(K) permits an individual accident and health insurance policy delivered or issued for delivery in New York by a commercial insurer to set forth an exclusion “for any loss sustained or contracted in consequence of the insured’s being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.” Further, Insurance Law § 3216(d)(2)(J) similarly permits an exclusion “for any loss to which a contributing cause was the insured’s commission of or attempt to commit a felony.” Insurance Law § 3221(c) makes both of these exclusions applicable to group policies issued by commercial insurers. However, the Insurance Law does not set forth comparable statutory exclusions for corporations licensed pursuant to Article 43 of the Insurance Law, municipal cooperative health benefit plans issued a certificate of authority pursuant to Article 47 of the Insurance Law, or for health maintenance organizations (“HMOs”). Other exclusions relevant to health insurers may apply. See,e.g., 11 NYCRR § 52.16(c)(4)(i), which provides, in part, that a health insurance policy may limit or exclude coverage for treatment arising out of participation in a felony.

Any health insurer that does not have an exclusion for intoxication or drug impairment in its policies, or any other exclusion that may apply, should accept proof of a person’s claim for necessary emergency health services rendered in a general hospital (including ambulance services attendant thereto and related medical screening) that the person furnishes as soon as reasonably possible consistent with Insurance Law §§ 3216(d)(1)(G),[4]3221(a)(9), 4305(l), and 4306(n).[5] The Department would not consider it reasonably possible for the covered person to furnish proof of loss until the no-fault insurer receives a final judgment.

Further, Insurance Law § 5103(b)(3) permits a no-fault insurer to exclude from no-fault coverage any person who is injured while committing an act that would constitute a felony. Although a violation of Vehicle and Traffic Law § 1192 could constitute a felony in certain instances, the Department construes Chapter 303 to require no-fault coverage if the only act that the person committed that constitutes a felony was operating a motor vehicle while in an intoxicated condition or while the person’s ability to operate the vehicle was impaired by the use of a drug. An insurer still may have a basis for excluding a person from no-fault coverage pursuant to Insurance Law § 5103(b)(3) if the person is injured while committing an act that would constitute a felony, but that is separate and apart from the intoxication or impairment, such as bank robbery. Note that this construction is limited to no-fault coverage under § 5103(b)(3), and does not apply to health insurance coverage.

Insurance Law § 5105 provides for intercompany loss transfer between insurers through mandatory arbitration when “at least one of the motor vehicles involved is a motor vehicle weighing more than six thousand five hundred pounds unloaded or is a motor vehicle used principally for the transportation of persons or property for hire.” A no-fault insurer that utilizes the recovery provisions under the amended Insurance Law § 5103(b)(2) may not also use Insurance Law § 5105 if it has already recovered from the driver, since it would already have been made whole.

As per Insurance Law § 5103(b), a no-fault insurer is not required to exclude coverage for intoxication or impairment. Therefore, a no-fault insurer may continue to have the option to delete from the policy all exclusions for intoxication or impairment by the use of drugs or alcohol, which would include coverage of necessary emergency health services. However, a no-fault insurer that chooses to delete all exclusions for intoxication or impairment also deletes from the policy the Chapter 303 provision that gives it the right to maintain a cause of action against the covered person for the amount of first-party benefits paid or payable on behalf of the covered person where the covered person is found to have violated Vehicle and Traffic Law § 1192.

With respect to its effective date, Chapter 303 states that it applies to all motor vehicle insurance policies “issued, renewed, modified, altered or amended on or after” January 26, 2011.

Chapter 303 does not require a motor vehicle insurer to send a conditional renewal notice pursuant to Insurance Law §§ 3425(d)(3) and 3426(e)(1)(B), because the amendment does not effectuate a reduction in coverage under the policy.

In addition, the Department is revising the mandatory personal injury protection endorsement set forth in 11 NYCRR § 65-1.1(d) and the mandatory additional personal injury protection endorsement set forth in 11 NYCRR § 65.1-3(c). The revised endorsements are deemed approved under Insurance Law § 2307 and a motor vehicle insurer may use the endorsements after providing notice to the Department. Alternatively, a motor vehicle insurer may file the revised prescribed endorsements with the Department for approval. However, in either case, the no-fault insurer should specify whether the endorsements include language that permits the no-fault insurer to maintain a cause of action against the covered person for the amount of first party benefits paid or payable on behalf of the covered person if such person is found to have violated Vehicle and Traffic Law § 1192.

If a motor vehicle insurer does not provide notice to the Department or file the revised prescribed endorsements for approval, then any policy issued, renewed, modified, altered, or amended on or after January 26, 2011 that does not conform to Chapter 303 will, pursuant to Insurance Law § 3103(a), nonetheless be enforceable as if the policy provides the required coverage pursuant to Chapter 303, and will be valid and binding upon the insurer. However, such a policy will not be enforceable as if the policy grants an insurer a cause of action against the covered person.

Further, Chapter 303 applies to self-insurers with respect to accidents occurring on or after January 26, 2011, and the Department is amending the list of permissible exclusions for self-insurers set forth in 11 NYCRR § 65-2.3(j) accordingly.

This evening while I was composing this post and cogitating about the Department's interpretation of this new law, a thought occurred to me: should the emergency services exception to the intoxication exclusion of amended 5103(b)(2), set to take effect on January 26th, apply to anything other than basic PIP? The Insurance Department has said yes, but I say perhaps not, and here's why.

Chapter 303 amended paragraph (2) of subsection (b) of Insurance Law § 5103, and subsection (b) provides that “[a]n insurer may exclude from [the] coverage required by subsection (a)” injuries due to various types of conduct by the injured person (bold and italics are mine). Subsection (a) of 5103 provides that:

Every owner's policy of liability insurance issued on a motor vehicle in satisfaction of the requirements of article six or eight of the vehicle and traffic law shall also provide for; … the payment of first party benefits[.]”

As used in 5103(a), the term “first party benefits” is defined by 5102(b) to mean “payments to reimburse a person for basic economic loss on account of personal injury arising out of the use or operation of a motor vehicle[.]” Section 5102(a) defines “basic economic loss” to mean “up to fifty thousand dollars per person of” health care expenses, loss of earnings and other reasonable and necessary expenses. Although section 5102(a)(5) adds to the definition of “basic economic loss” “an additional option to purchase, for an additional premium, an additional twenty-five thousand dollars of coverage” for either loss of earnings or psychiatric, physical or occupational therapy and rehabilitation after the initial $50,000 of basic economic loss has been exhausted, OBEL is not "required" under 5103(a) as first party benefits. It's optional.

Clearly the amendment of 5103(b)(2) was intended to apply to $50,000 in basic PIP, but a plain reading of the 5103 and 5102 would seem to extend the intoxication exclusion’s exception for necessary emergency health services rendered in a general hospital to only those amounts comprising required “basic economic loss” under 5102(a) and 5103(a), and not to any amount paid as OBEL or extended economic loss above basic PIP. I have emailed Associate Insurance Examiner Elizabeth Anderson at the Insurance Department, Circular Letter No. 4's contact person for no-fault insurers, to respectfully suggest that the Department may have erred in promulgating amended APIP endorsement language and and issuing Circular Letter No. 4 (2011) to include references to the mandatory APIP endorsement. If the Department responds, I'll post its response here.

Finally, if you are reading this post before January 20, 2011, you'll notice at the top of this page that I am presenting a free webinar on January 19, 2011 at 1:00 PM to discuss this important change in New York no-fault law and its impact on no-fault insurers. Registration is limited to persons employed by no-fault insurers or their claim administrators. If you are interested in attending, scroll upward and click the Register Now button. If you are reading this post after January 19, 2011 and are interested in getting a copy of that webinar, please contact me.

Thursday, January 13, 2011

Today the New York State Insurance Department unveiled what it describes as an "improved" and redesigned website, "offering a cleaner, crisper appearance and focusing on making it easier for users to find information."

We'll see. My first take? Although the landing page is simpler, more information and resources are now hidden and take several clicks to find. See for yourself:

The world of liens, pronounced with two syllables -- "lee-uhns" -- south of the Mason-Dixon Line, can be murky and misunderstood. Indeed, my very own kind -- lawyers -- are prone to using the term recklessly, often mistakenly referring to disputed obligations, claims and debts as liens. As our state's Court of Appeals has noted, however, "[t]he creation of a lien requires agreement or statute[.]" Teichman v. Community Hosp., 87 N.Y.2d 514, 521 (1996).

New York's Lien Law is both arcane and archaic. Here in New York we have statutorily created liens on vessels, liens on monuments, gravestones and cemetery structures, liens for labor on stone, mold liens, liens for the "services" of stallions or bulls, artisans' liens on personal property, self-service storage facility liens, liens of bailees of animals, liens of bailees of motor vehicles, motor boats or aircraft, liens of manufacturers and throwsters of silk goods, liens of bailees for hire, liens of truckmen and draymen, liens of motion picture film laboratories, liens of hospitals, and corporate mortgage liens against real and personal property.

This case pertains to the purported lien of a bailee of a motor vehicle, existing under New York Lien Law § 184 and otherwise known as a garageman's lien.

After hitting a parked car on April 24, 2010, petitioner's husband arranged for respondent First Class Collision to tow petitioner's 2005 Chevy Equinox to respondent's body shop for an estimate. According to petitioner, the respondent body shop provided her husband with a $7,000 verbal repair estimate that was later reduced to $5,000. Lacking collision coverage on the Equinox, petitioner told one of the respondent LLC's members, Greg Sbrocchi, that she could not afford pay $5,000 to repair the vehicle and asked him to get "used" parts to reduce the cost. Petitioner contended that the respondent offered to buy the vehicle for $500 although it was valued at $9,000, and when she refused, respondent sent her a notice of lien.

The body shop's version of the parties' interaction was starkly different, of course. Sbrocchi averred in an affidavit that petitioner's husband came to his office on or about April 24, 2010 and requested that he pick up the car and tow it to Sbrocchi's shop for an estimate. Sbrocchi stated that petitioner's husband came back to his shop the next day, April 25 , 2010, and signed a written authorization for repairs. Sbrocchi further claimed that on May 1, 2010, petitioner's husband again returned to his shop and was given a written repair estimate. Sbrocchi alleged that on May 8, 2010, the petitioner herself came to his shop and told him that she did not have insurance coverage and would not pay for the repairs and asked that the car be towed to her house. In response, Sbrocchi told her that she would have to pay for the towing and storage charges that already had accrued and, when petitioner eventually refused to pay those towing and storage charges, he served petitioner with a notice of lien and sale.

Petitioner then commenced this special proceeding by order to show cause pursuant to New York Lien Law § 201-a to lift respondent's notice of lien and sale. Respondent cross-moved to dismiss petitioner's application and for summary judgment compelling petitioner to pay the respondents the towing and storage charges it sought.

In granting petitioner's application and lifting the notice of lien and sale, Nassau County Supreme Court Justice Randy Sue Marber found respondent's version of the parties' interaction to be incredible and concluded that respondent had failed to establish that it had performed garage services or stored the vehicle with the owner's consent:

Pursuant to Lien Law § 184 (1), a garage keeper who tows, stores, repairs maintains or otherwise furnishes services or supplies to a motor vehicle, at the request or with the consent of the owner, has a lien upon such vehicle to the extent of the sum due for the services performed. A garage keeper may maintain a lien against a vehicle where the garage keeper performed garage services or stored the vehicle with the owner's consent for an agreed upon price or, in the absence of an agreement, for a reasonable price. General Motors Acceptance Corp. v. Anthony J. Minervini, Inc., 301 A.D.2d 940 (3d Dept. 2003). Under Article l2-A of the Vehicle and Traffic Law, the garage must be a duly registered motor vehicle shop.

[Section] 184 of the Lien Law, which is in derogation of common law, must be strictly construed. Phillips v. Catania, 155 A.D.2d 866 (4th Dept. 1989). It is the garage keeper's burden to establish that it has performed garage services or stored the vehicle with the owner's consent.National Union Fire Ins. Co. of Pittsburg, Pa. v. Eland Motor Car Co., Inc., 85 N.Y.2d (1995), clarification denied 87 N.Y.2d 1002 (1996).

A lien is specific to the vehicle upon which repairs were made (National Union Fire Ins. Co. of Pittsburg, Pa. v. Eland Motor Car Co., Inc., supra at p. 730) and an estimate of repairs does not create a lien (Mercedes-Benz Credit Corp. v. One Stop Auto Truck Ctrs., 170 Misc2d 354, 650 N.Y.S.2d 913 (Supreme Nassau Co.1996)). Moreover, storage fees must specifically be authorized in order to be included as par of a lien on the vehicle. Where a garage keeper claims more than is actually due, he or she is guilty of conversion and liable to the owner in damages. BMW Bank of N Am. v. G & B Collsion Ctr., Inc., 46 A.D.3d 875 (2d Dept. 2007); F&N Corvette Classics v. Corvette Repairs, Inc., 206 A.D.2d 349 (2d Dept.1994 ).

Reviewing the Respondent, Greg Sbrocchi' s Affidavit and examining the exhibits attached to the Respondents' Cross-motion lead the Court to conclude that the Petitioner never received the authorization (Exhibit A) or estimate (Exhibit B). Specifically, the Respondent claims to have obtained the Petitioner's husband's signature on the authorization on April 25, 2010. However, Exhibit A contains storage charges from April, 2010 to June 9, 2010. Mr. Sbrocchi's statement and the Exhibit are inconsistent. Additionally, the Estimate (Exhibit B) is dated July 12 2010. As such, it could not have been provided to the Petitioner's husband on May 1 , 2010. These exhibits establish that the statements made by Mr. Sbrocchi in his Affidavit are not credible. As such, the Court finds that the Respondents have not established that the storage charges were authorized and the Lien is improper.

Those of you who have attended one of my social network investigations presentations would know this, but if you do NOT want people whose profiles you view on LinkedIn to know you've done so, follow these steps:

sign on to LinkedIn;

scroll over your name in the upper right-hand corner of your screen and click "Settings";

re-enter your LinkedIn sign-in information if necessary;

scroll down to "Privacy Settings" on the right side of the page and click "Profile Views";

select the radio button for how LinkedIn users will see you when you look at their profiles -- from your name and headline (most transparent), to anonymous profile characteristics (less transparent), to completely invisible;

click "Save Changes" and you're done.

If you use LinkedIn as one of the many social network sites to research individuals, I recommend you become invisible. I have.

Plaintiff made a claim for the alleged theft of a 1990 Lincoln Town Car to his auto insurer, Encompass Insurance Company, which retained the defendant law firm to conduct an examination under oath of the plaintiff. After the EUO was held, Encompass denied plaintiff's claim based upon his failure to demonstrate that he had an insurable interest in the subject vehicle at the time of the alleged loss.

Unhappy with that decision, plaintiff commenced this small claims action against Encompass' EUO counsel, alleging that they had misled Encompass regarding his ownership of the vehicle. Defendant moved to dismiss this small claims action pursuant to CPLR 3211 (a) (2) [jurisdiction], (7) [fails to state cause of action] and (10) [absence of necessary party]. The District Court granted defendant's motion, and plaintiff appealed.

In AFFIRMING the action's dismissal, the Appellate Term held:

Our review is limited to whether substantial justice was done between the parties according to the rules and principles of substantive law (see UDCA 1804, 1807). Upon our review of the motion papers, we find that defendant's motion to dismiss the action was properly granted, as plaintiff failed to articulate any cognizable cause of action against defendant which would entitle him to relief. Accordingly, there is no basis for this court to reverse the District Court's order dismissing the action.

Nothing presumably prevented plaintiff from suing his insurer directly, but this action against Encompass' EUO counsel failed to state a claim upon which relief could be granted and, thus, was dismissed. Encompass' EUO counsel owed the insured no duty and had no contractual relationship with him. Absence the allegation of an independent tort, a claimant's or insured's suit against the insurer's coverage counsel should be subject to summary dismissal.

Wednesday, January 5, 2011

Although I consider myself a "downstater" by birthright, I don't read the New York Post except when I come across a link to a New York Post story that interests me. Like last night, when Dave Barshay of the No-Fault Paradise blog, passed along this bombshell:

ALBANY -- Gov. Cuomo will reveal plans tomorrow to replace the powerful Banking and Insurance departments, as well as the lesser-known Consumer Protection Board, with a less costly single agency, as he delivers a grim first State of the State Address, The Post has learned.

The Banking Department, which traces its history to 1782, has enormous regulatory power over all state-chartered banks and lending institutions. The Insurance Department, formed in 1860, plays a key role in regulating virtually all insurance companies that operate in New York.

Both employ thousands of state workers, and the unprecedented consolidation is expected to lead to a significant labor reduction. But sources said the consolidation would produce a more efficient agency with even stronger industry oversight.

Cuomo was said by a source familiar with the decision to have become convinced during his four years as attorney general that the two massive regulatory agencies were "outdated in an era when insurance companies often function as banks and engage in securities and other investment-type businesses."

Cuomo also plans to fold the far smaller consumer agency into the new department because many of its functions already are carried out by the Attorney General's Office and other state agencies.

Creating the powerful regulatory agency will need approval from the Legislature. Cuomo will lay the foundation for the most sweeping set of budget cuts since the Great Depression in what some are calling a "pain and suffering" State of the State Address to New York's 212 lawmakers and more than a thousand private citizens.

In an effort to help generate a climate willing to accept severe budget cuts, Cuomo announced he was cutting his own pay, that of Lt. Gov. Robert Duffy and dozens of top staffers by 5 percent.

Cuomo's speech isn't expected to contain the worst of what's coming -- potentially more than 10,000 state layoffs, the dramatic downsizing of many agencies and the abolition of others, sources said.

As the post title of Barshay's blog reads, wow indeed.

So will changes to Regulation 68 -- New York's no-fault regulation -- be put on hold or come sooner than expected?

Editor's Note ~~ During his State of the State Address on January 5, 2011, Governor Andrew Cuomo did in fact announce his intention to propose the merging of the Banking Department, Insurance Department, and Consumer Protection Board into a "Department of Financial Regulation". Read what Governor Cuomo actually said about combining these regulatory agencies here.

Plaintiff MRI provider billed. Defendant no-fault insurer requested verification. Plaintiff sued. At the nonjury trial, in support of its defense that plaintiff's action was premature because it had not responded to defendant's verification requests, defendant produced the claims examiner who had prepared the verification requests and who testified about the defendant's standard office mailing practices, but acknowledged on cross examination that she had no personal knowledge of the mailroom's actual clerical procedures. Plaintiff offered no evidence that it had ever responded to the verification requests, arguing only that defendant's proof of mailing of the verification requests was insufficient because the claims examiner who testified at trial did not have personal knowledge of the defendant's actual mail handling procedures. The trial judge agreed and awarded judgment to plaintiff for $4,390.16. Defendant appealed.

In REVERSING the judgment and dismissing the complaint, the two-justice majority concluded that defendant presented sufficient evidence at trial of its standard office mailing practice:

The witness's credible and consistent account of the mailing procedures generally followed by defendant, including how the mail was systematically picked up during the work day, when it would "go out," and what steps would be taken if a verification letter was returned as undeliverable (an event which, the witness noted, did not occur here), "obviated the necessity of producing a witness with personal knowledge of the actual mailing" of defendant's verification letters (see Badio v Liberty Mut. Fire Ins. Co., 12 AD3d 229, 230 [2004]). Nor was it incumbent upon defendant to produce a witness, such as a mail clerk or other clerical employee, whose duty it was to ensure compliance with its mailing procedures or who possessed personal knowledge of such compliance see Delta Diagnostic Radiology, P.C. v Chubb Group of Ins., 17 Misc 3d 16 [2007]).

What is most notable about this decision, however, is the majority's excoriation of what has become our New York no-fault litigation system:

Before concluding, we would be remiss in failing to note that the facts and circumstances of this action do much to illustrate the disturbing reality that first-party no-fault benefits litigation has become the antithesis of what was supposed to be an expeditious and simplified process for the payment of medical costs for injuries sustained in motor vehicle accidents (see Walton v Lumbermans Mutual, 88 NY2d 211, 214 [1996]). Too often, lawsuits with a value akin to a small claims action become bogged down by an insistence by one party or another that mailing of routine forms be established with scientific precision, asking judges, already burdened to the breaking point with the veritable legion of no-fault cases overflowing from our court dockets (while very able arbitrators remain underutilized), to require multiple witnesses to be summoned to the courthouse, merely to establish a presumption of mailing, even in the absence of an express denial of receipt of the disputed correspondence. Unfortunately, this class of cases has spawned a body of "gotcha" jurisprudence, marked by a near manic preoccupation with form over substance.

How we have reached this sorry state is of little moment. Perhaps all branches of government need to call a "time out" and, working together, endeavor to construct a workable process to achieve what the framers of the No-Fault statute had in mind when they sought to establish a simplified and expeditious process to reimburse those of our citizenry injured in automobile accidents. For sure, the system now in place is not achieving that laudable aim.

Amen and pass the salt. Enough already.

Albany, your courts are calling. Again. Shall I take a message or will you answer the call this time?

Monday, January 3, 2011

Plaintiff sought reimbursement from defendant under a two-year, claims-made "Executive and Organization Liability Insurance Policy" of defense costs associated with two, separate federal investigations. Defendant denied coverage on the ground that plaintiff failed to make the claim within the policy period.

In MODIFYING the lower court's order to completely grant summary judgment to defendant, the Appellate Division, Fourth Department, held that plaintiff failed to comply with the policy's requirement that notice be given "as soon as practicable . . ., but in no event later than . . . the end of the Policy Period or Discovery Period[.]" The appellate court also rejected the plaintiff's contention that that its failure to give timely notice of the claim should be excused because it did not realize that subpoenas it had been served with were covered under the policy until after the deadline date:

The policy unambiguously includes the subject subpoenas within the definition of potential claims, and plaintiff's unilateral mistake in reading the policy cannot serve as a basis for expanding coverage. "[O]ne who executes a plain and unambiguous [contract] cannot avoid its effect by merely stating that [he or] she misinterpreted its terms" (Koster v Ketchum Communications, 204 AD2d 280, lv dismissed 85 NY2d 857).

The New York State Insurance Department recently released its proposed regulatory agenda for the first half of 2011. Items of potential interest to property and casualty insurers and producers doing business in New York include (numbering from original; Agency contacts omitted):

4. Adoption of a new part to 11 NYCRR to exercise the Superintendent's authority under Section 316 of the Insurance Law to require an insurer or other person or entity making a filing or submission with the Superintendent to submit the filing or submission by electronic means, unless the insurer or other person or entity applies for, and the Superintendent grants, an exemption from the electronic filing requirement.

8. Amendment of 11 NYCRR 89 (Audited Financial Statements) (Regulation 118) to improve the Department's surveillance of the financial condition of insurers by requiring an annual audit of financial statements by independent certified public accountants, and the filing of audit reports and other related documents.

10. Amendment of 11 NYCRR 60-2 (Supplementary Uninsured/Underinsured Motorists Insurance) (Regulation 35-D) to revise all references in sections 60-2.3 and 60-2.4 from "AAA/American Arbitration Association” to "designated organization", amend rules related to the manner in which the organization designated by the Superintendent to administer the SUM arbitration program assesses the cost of the program to the insurance industry, and make various editorial revisions to the prescribed endorsement and other portions of the regulation to clarify the intent and application of the coverage.

12. Amendment of 11 NYCRR 65-1, 65-2, 65-3, 65-4 (Regulations Implementing the Comprehensive Motor Vehicle Insurance Reparations Act) (Regulations 68-A, 68-B, 68-C & 4 68-D) to revise No-Fault endorsements and requirements for insurer claim practices, and to amend rules related to both the manner in which the organization designated by the Superintendent administers the first party motor vehicle insurance arbitration programs and assesses the costs of these programs to the insurance industry.

14. Amendment of 11 NYCRR 216 (Unfair Claims Settlement Practices and Claim Cost Control Measures) (Regulation 64) to update the entire regulation to, among other things, provide notice and time frame requirements for third party claims.

17. Amendment of 11 NYCRR 67 (Mandatory Underwriting Inspection Requirements for Private Passenger Automobiles) (Regulation 79) to include additional circumstances under which an insurer may voluntarily waive mandatory inspection of a motor vehicle for physical damage coverage, and to clarify that the use of digital photography and electronic access to inspection report data are permitted.

18. Adoption of a new part to 11 NYCRR to provide requirements regarding policies written to cover owner-controlled and contractor-controlled insurance programs (wrap-ups).

20. Amendment of 11 NYCRR 19 (Homeowner's Insurance; Application for Withdrawal from Marketplace) (Regulation 154) to revise the definition of "material reduction of volume of policies" to include a reduction of the net number of homeowner policies within a county.

23. Amendment of 11 NYCRR 65-1 & 65-2 (Regulations Implementing the Comprehensive Motor Vehicle Insurance Reparations Act) (Regulations 68-A & 68-B) to comply with Chapter 303 of the Laws of 2010, which prohibits insurers from excluding from coverage a driver who is injured while operating a motor vehicle in an intoxicated condition or while the ability to operate such a vehicle is impaired by the use of a drug and who receives necessary emergency health services rendered in a hospital, including ambulance services attendant thereto and related medical screening.

68. Adoption of a new part to 11 NYCRR to provide that cancellation notices subject to section 3425 of the Insurance Law should include the date and hour of cancellation, the date of the notice, and for nonpayment of premium cancellations, a statement informing the consumer that cancellation will not take place if the consumer makes timely payment of the premium.

69. Adoption of a new part to 11 NYCRR to provide rules and guidelines to assure full disclosure of all relevant information in advertisements that describe or solicit the purchase of property/casualty insurance coverage, which are published, issued or distributed through various advertising media.

70. Amendment of 11 NYCRR 26 (Independent Adjusters) (Regulation 25) to establish a crop adjuster’s license and examination for that license. New York will tailor the license and exam to comply with federal requirements that necessitate the state to continue licensing supervision of adjusters who adjust claims for damages to crops insured under the federal insurance program for crop multi-peril.

72. Amendment of 11 NYCRR 86.6 (Fraud Prevention Plans and Special Investigations Unit) (Regulation 95) to establish a requirement that any amendment to a fraud prevention plan that the Frauds Bureau had previously approved must be submitted to the Frauds Bureau within thirty days of its implementation.

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